Board Date: 1 July 2015 Item: Modernisation of the District, Metropolitan, Circle and Hammersmith & City lines, and Automatic Train Control Contract This paper will be considered in public 1 Summary 1.1. The purpose of this paper is to provide an update to the Board on the status of the modernisation of the District, Metropolitan, Circle and Hammersmith & City lines (the Programme) including the reprocurement of the Automatic Train Control (ATC) Contract. 1.2. The Board is asked to approve a revised Project Authority for the Programme and subject to satisfactory close of the remaining issues with Thales Ground Transportation Systems UK Limited (Thales), to delegate to the Commissioner authority to: (a) grant Procurement Authority within the upper limits set out in the paper on Part 2 of the agenda for the award of the ATC Contract, Maintenance Support Contract and the Capital Framework Agreement (the Agreements) and to agree the substantive terms of the Agreements; and (b) grant Procurement Authority within the upper limits set out in the paper on Part 2 of the agenda for the Rolling Stock Contract with Bombardier Transportation UK Limited to enable the train fitment for the ATC Contract. 1.3 On 17 June 2015, the Finance and Policy Committee endorsed the recommendations in this paper. The issues raised by the Committee are summarised in section 11 of this paper. 1.4 A paper is included on Part 2 of the agenda, which contains exempt supplementary information. The information is exempt by virtue of paragraph 3 of Schedule 12A of the Local Government Act 1972 in that it contains information relating to the business affairs of TfL. Any discussion of that exempt information must take place after the press and public have been excluded from this meeting. 2 Recommendations 2.1. The Board is asked to note the paper and the supplementary information on Part 2 of the agenda, and: (a) grant revised Project Authority, of £5,412m, for the Sub-Surface Upgrade Programme for the modernisation of the District, Metropolitan, Circle and Hammersmith & City lines (the Programme), such Project Authority to be split into the two sub-programme authorities specified in Table 6; (b) delegate to the Commissioner authority to: (i) grant Procurement Authority within the upper limits set out in the paper on Part 2 of the agenda for the Automatic Train Control (ATC) Contract, the Maintenance Support Contract and the Capital Framework Agreement (the Agreements); (ii) approve the substantive terms of the Agreements; (iii) subject to satisfactory terms being agreed, authorise TfL Officers and Subsidiaries (as described in paragraph 2.2) to finalise and enter into the Agreements with Thales Ground Transportation Systems UK Limited; (iv) grant revised Procurement Authority within the upper limits set out in the paper on Part 2 of the agenda for the Rolling Stock Contract with Bombardier Transportation UK Limited to enable the train fitment for the ATC Contract; (v) authorise the agreement and execution (whether by deed or otherwise on behalf of TfL or any Subsidiary (as appropriate)) any documentation to be entered into in connection with the completion and implementation of the Agreements and the Rolling Stock Contract and any of the matters referred to in them (including, without limitation, all agreements, deeds, guarantees, indemnities, announcements, notices, contracts, certificates, letters or other documents); (vi) authorise TfL Officers and Subsidiaries to do all such other things as they consider necessary or desirable to facilitate the execution and implementation of the Agreements and the Rolling Stock Contract and the matters referred to in them; (c) in the event that a sub-programme’s risk is inadequate, to authorise the Managing Director Finance to approve an increase in the Project Authority of that sub-programme and a corresponding reduction of Project Authority in the other sub-programme, such that total Project Authority is not exceeded; (d) note that the Maintenance Support Contract has a duration beyond the end of the current Business Plan and future Business Plans will need to provide for the remaining years of operation; and (e) note the proposed arrangements for the engagement of a Programme Support Partner and that authority for entering into the contract will be sought in accordance with Standing Orders. 2.2. The following Officers and Subsidiaries shall have delegated authority: (a) TfL Officers: the Commissioner, Managing Director Finance, Managing Director Rail and Underground, General Counsel, Chief Finance Officer; and (b) Subsidiaries: Subsidiaries of TfL including Transport Trading Limited and any other subsidiary (whether existing presently or to be formed) of Transport Trading Limited and any of the directors of the relevant company shall be authorised to act for and on behalf of that company. 3 Background 3.1. The Programme is delivering the modernisation of four London Underground (LU) lines (District, Metropolitan, Circle, and Hammersmith & City). This modernisation will renew aging assets and allow more trains to run on these lines, to support London’s growing population, which is expected to increase by 1.4 million people by 2030. 3.2. The District, Circle, Metropolitan and Hammersmith & City lines together make up nearly 40 per cent of the London Underground network, and include the oldest part of the network built in 1863. As well as circling central London, the lines serve suburbs in the West, North West and East of the capital and carry around 1.3 million passengers a day. Following completion of this work up to 32 trains per hour will operate on the core sections of these lines, and peak passenger capacity will be increased by an average of 33 per cent. 3.3. The Programme is London Underground’s top priority, and will provide a crucial contribution to the increased capacity of London’s transport network. It aligns closely with the Mayor’s Transport Strategy Goals of: Improving Transport Opportunities, and Safety and Security, for all Londoners; Enhancing the Quality of Life for Londoners; and Supporting Economic Development and Population Growth. 3.4. The Programme is scoped to deliver work in two significant tranches, which, in combination, will achieve the necessary modernisation of the four lines, as follows: (a) introduction of new trains and substantial associated enabling works; and (b) replacement of signalling with modern Automatic Train Control (ATC), supported by associated enabling works, to deliver faster, more frequent and more reliable services. 3.5. A significant proportion of the first of these tranches of work has been delivered. As of Period 1 2015/16 132 out of 191 new walk-through, air cooled, high capacity “S Stock” trains have been introduced onto the network. Three quarters of the existing authority has been successfully delivered to date, including the following: (a) replacement of the Metropolitan line A stock trains with a fleet of 58 eight car S8 trains; (b) replacement of the Circle and Hammersmith & City line C stock trains with a fleet of 53 seven car S7 trains; (c) partial replacement of the District line D stock trains with 21 out of an eventual fleet of 80 seven car S7 trains; (d) track and signalling modifications at Edgware Road, Baker Street and Aldgate; (e) 224 stabling sidings enabled for S Stock use, including creation of a new stabling facility at Lillie Bridge; (f) 113 stations enabled for S Stock including upgraded communication interfaces between the new trains and platform equipment; (g) 17 platforms have been lengthened to accommodate the new trains; (h) adjustments to existing signalling on 310kms of track to accommodate the new fleet of trains, including replacement of track circuits and relocation of signals; (i) adjustments to existing power supply to accommodate the new fleet of trains, including 72kms of new low resistance conductor rail; (j) upgraded depot and stabling facilities have been delivered at Neasden and Hammersmith; and (k) construction of a new Service Control Centre building at Hammersmith to provide centralised control for all four lines. 3.6. Project Authority was first approved in July 2009 following the administration of Metronet. In April 2011, the Finance and Policy Committee, acting under delegated authority from the Board, approved revised Project Authority of £4,225m to reflect rebaselined Programme scope and cost. Contingency of £364m was also approved but was centralised at LU level, with drawdown requiring Board approval. 3.7. In February 2013, the Board approved the inclusion of three budgeted projects that were previously outside the scope of the Programme to maximise delivery efficiencies. This increased the overall Project Authority to £4,244m. In November 2013, the Board approved a drawdown of £15.3m from contingency, in order to undertake additional scope, increasing the overall Project Authority to its current value of £4,259m. 3.8. Following cancellation of the ATC Contract with Bombardier at the end of December 2013, LU began a comprehensive rebaselining of the Programme, and in parallel a new procurement was launched to select a modern ATC system for these lines. 4 Programme Scope 4.1. In addition to the delivered scope outlined in paragraph 3.5, the remaining items of the Programme, not yet delivered, included in the April 2011 scope were as follows: (a) completion of the roll-out of S Stock trains on the District line; (b) S Stock stabling, train maintenance and cleaning facilities at Ealing Common and Upminster depots; (c)